Enlightenment Through Understanding

The Autonomous Economy

February 9, 2018

The Nunes memo is a big story right now, but I haven’t done much reading into it, and due to Bitcoin and other important priorities, I’m sorta out of the loop. News cycles and politics are like carousels in that they go in circles, the same stuff over and over, albeit with small changes along the way as the story develops. In early 2017 people were talking about the same Russia-FBI stuff as the are now, and will be doing so well into 2020 when Trump’s reelection campaign comes around. Likely there will never be a resolution as to the events that transpired in 2016. It’s too bad that the Trump administration is mired in this controversy instead of being able to devote its full energy to governing. The entire first term will be spent on endless legal counsels trying do not only defend Trump’s innocence and integrity, but implicate the democrats too.

But the fact that the stock market [1] and economy has done well in spite of the administration being hamstrung, is evidence of the autonomous nature of the U.S. economy and how the private sector runs parallel to the public one. But in less intelligent and less developed countries such as Brazil, Turkey, Greece, and Spain, this is not the case, and political scandal is a much bigger concern for the private sector, and additionally, political scandal has a direct impact on foreign equity markets and foreign currency. When corruption was recently uncovered in Brazil, for example, the Bovespa index posted its worst one-day drop ever and the Brazil Real currency crashed. Meanwhile, despite all controversy regarding Russia, Trump, and the FBI, the S&P 500 is unfazed (although it fell recently, it’s still up 20% since Jan 2017). A strong private sector, property rights, and rule of law is possibly the best firewall against government incompetence; regarding policy, rather than trying to improve government, a better approach may be to make the private sector stronger and increase cognitive capital.

Another contributing factor for America’s resiliency is redundancy and dissemination of power; in a large bureaucracy, such as in the U.S. or China , no one individual has too much power, which limits the damage any one individual can do, but it also creates a lot of redundancy, which is helpful if something goes wrong. But conversely, the bureaucracy also makes meaningful change difficult. The weak, encumbered bureaucracy can also outsource much of its governing to contractors and other aspects of the private sector.